New Jersey Tax Guide 2025
Explore New Jersey's state tax rates for income, sales, property, retirement, and more. Learn how New Jersey compares nationwide.
Navigating the complexities of state taxes can be daunting, but understanding New Jersey's tax landscape is essential for residents and newcomers alike.
In this guide, we'll explore key components of The Garden State's tax system, from income and sales taxes to property taxes and retirement benefits.
New Jersey state tax: Overview
New Jersey residents know they can pay some high taxes. Everything from gas tax to property taxes are among the highest in the states. Garden State heirs may also pay a death tax.
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However, there is some good news: New Jersey's state sales tax isn't so high compared to sales taxes in other states. After all, several products in the state are exempt from tax, and New Jersey's sales tax rate is reduced in some areas.
Plus, you may qualify for a New Jersey property tax relief program to help you with your high homeowner taxes.
Here's more of what you need to know about the Garden State's tax disposition.
In the news: Some New Jersey residents may be getting money soon. The state has enacted a new property tax relief program called "Stay NJ." Eligible homeowners could receive thousands of dollars in the form of a rebate on their property taxes.
For more information, check out Kiplinger's report, Stay NJ Could Give You $6,500: The Deadline You Can't Miss.
[Data for this state tax guide was gathered from a number of sources including the Census Bureau, the state’s government website, the Sales Tax Handbook, and the Tax Foundation. Property taxes are cited as a rate percentage rather than the assessed value.]
New Jersey income tax
New Jersey has a graduated state individual income tax rate that ranges from 1.4% to 10.75%, according to the Tax Foundation.
New Jersey retirement taxes
New Jersey tax on retirement income: New Jersey doesn't tax Social Security retirement benefits, Military pensions, or Railroad Retirement benefits.
Taxpayers 62 and older (or those who have a disability) may exclude all or part of their retirement income from state taxation. To qualify for the exclusion, taxpayers cannot have an income above $150,000.
The maximum deductions are $75,000 for single filers, $50,000 for married filing separately, and $100,000 for joint filers.
Tax on Taxable Income: Low of 1.4% (on up to $20,000) and a high of 10.75% (on more than $1 million)
- Social Security: Not taxable
- Pensions: Partially taxable (Income requirements apply)
- 401(k) and IRA Distributions: Partially taxable (Income requirements apply)
New Jersey sales tax
New Jersey imposes a 6.625% state sales tax. Localities can add an additional 2%.
However, the average local and combined sales tax rate is only 6.60%, according to the Tax Foundation.
- Groceries: Exempt
- Prescription drugs: Exempt
- Diapers: Exempt
- Women's menstrual products: Exempt
How much are property taxes in New Jersey?
In New Jersey, the average effective property tax rate is 1.77%, which is one of the highest in the nation.
New Jersey Property Tax Breaks
Eligible New Jersey residents who owned or rented their home during the tax year may qualify for ANCHOR property tax relief. Last year's payments were up to $1,750 each.
Additionally, qualifying New Jersey homeowners may also receive a property tax freeze. To qualify, residents must have lived in their current home since at least 2020, among other requirements.
These two New Jersey property tax relief payments are in addition to Stay NJ, a new property tax relief program set to make payouts in early 2026. Learn more on the state's Division of Taxation website.
New Jersey gas tax
Gasoline | $0.11 per gallon |
Diesel | $0.14 per gallon |
Source: Sales Tax Handbook
New Jersey taxes on alcohol and tobacco
Product | Tax Amount |
|---|---|
Cigarettes | $2.70 per pack |
Other tobacco products | 30% of wholesale price |
Medical Marijuana | 2% |
Recreational Marijuana | 6.63% |
Source: Sales Tax Handbook
Product | Tax Amount |
|---|---|
Beer | $0.12 per gallon |
Wine | $0.88 per gallon |
Liquor | $5.50 per gallon |
Source: Sales Tax Handbook
New Jersey estate and inheritance taxes
There is no longer an estate tax in New Jersey, but that doesn't mean residents are off the hook for paying death taxes.
The state has an inheritance tax of between 11% and 16%. However, the heirs below won't need to pay a thing.
- Spouses
- Children
- Grandchildren and great-grandchildren
- Parents and grandparents
- Civil union partners
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